ATHENS, GREECE, August 20, 2009. STEALTHGAS INC. (NASDAQ: GASS), a ship-owning company primarily serving the liquefied petroleum gas (LPG) sector of the international shipping industry, announced today its unaudited financial and operating results for the second quarter ended June 30, 2009.Â
Second Quarter 2009 Results:Â
For the three months ended June 30, 2009, voyage revenues amounted to $27.1 million, a decrease of $1.4 million or 4.9%, compared to voyage revenues of $28.5 million for the three months ended June 30, 2008. Net income for the three months ended June 30, 2009 was $6.5 million or $0.29 per share, a decrease of $2.9 million, from net income of $9.4 million or $0.42 for the three months ended June 30, 2008. Net income for the three months ended June 30, 2009, excluding the $0.8 million loss on the sale of a vessel, was $7.3 million or $0.33 per share, whereas there were no vessel sales in the same quarter of 2008.
The decline in net income is mainly attributable to lower revenues due to an increase in the number of idle days where vessels were unemployed and/or lower charter rates being obtained in the spot market, together with increased costs, mainly in voyage expenses as a consequence of six more ships operating in the spot market compared to the same quarter in 2008.Â
For the three months ended June 30, 2009, the Company had a $0.5 million realized cash loss and a $3.2 million unrealized non-cash profit on interest rate swap arrangements and foreign currency hedging arrangements. This compares to an unrealized non-cash profit on interest rate swap arrangements of $1.8 million for the three months ended June 30, 2008.
Voyage and operating expenses for the three months ended June 30, 2009 were $2.1 million and $9.8 million respectively compared to $1.3 million and $7.9 million for the three months ended June 30, 2008, these increases were due primarily to the increased level of spot market activity with 743 spot voyage days in the second quarter of 2009 compared to just 77 spot voyage days in the same period last year. Under spot voyage charters we are responsible for all voyage expenses including fuel, port and canal fees. Net income was also affected by increased depreciation expenses as there was an average of three more vessels in the Companyâs fleet in the second quarter of 2009 compared to the same period last year.Â
Basic and diluted earnings per share were $0.29 for the three months ended June 30, 2009 as compared to basic and diluted earnings per share of $0.42 for the three months ended June 30, 2008.Â
Adjusted EBITDA for the three months ended June 30, 2009 was $14.6 million, a decrease of $3.0 million, or 17.1% from $17.6 million for the three months ended June 30, 2008. A reconciliation of Adjusted EBITDA to Net Income and to Net Cash Provided by Operating Activities is set forth below.
Before the non-cash items and the loss attributable to the sale of a vessel described above, net income was $4.1 million, or $0.18 per share for the three months ended June 30, 2009, as compared to $7.6 million, or $0.35 per share, for the three months ended June 30, 2008, a decrease of $3.5 million or 46.1%
An average of 41.6 vessels were owned by the Company in the three months ended June 30, 2009, earning an average time-charter equivalent rate of approximately $6,638 per day as compared to 38.0 vessels, earning an average time-charter equivalent rate of $7,909 per day for the same period of 2008.Â
First Half 2009 Results
For the six months ended June 30, 2009, voyage revenues amounted to $56.3 million and net income was $6.7 million, an increase of $0.8 million, or 1.4%, and a decrease of $10.2 million, or 60.4%, respectively, from voyage revenues of $55.5 million and net income of $16.9 million for the six months ended June 30, 2008. For the six months ended June 30, 2009 net income included a loss on the sale of vessels of $0.8 million compared to a profit of $1.7 million on the sale of vessels in the same period in 2008. Net income for the six months ended June 30, 2009 net of the loss on the sale of vessels was $7.5 million compared to $15.2 million for the same period in 2008, excluding the gain of $1.7 million on the sale of vessels in that period.
Basic and diluted earnings per share were $0.30 for the six months ended June 30, 2009 as compared to basic and diluted earnings per share of $0.76 for the six months ended June 30, 2008.Â
For the six months ended June 30, 2009, the Company had a $1.6 million realized cash loss and a $3.0 million unrealized non-cash loss on interest rate swap arrangements and foreign currency hedging arrangements. This compares to an unrealized non-cash loss on interest rate swap arrangements of $0.5 million for the six months ended June 30, 2008.
Adjusted EBITDA for the six months ended June 30, 2009 was $23.2 million, a decrease of $8.9 million, or 27.7%, from $32.1 million for the six months ended June 30, 2008.Â A reconciliation of Adjusted EBITDA to Net Income and to Net Cash provided by operating activities is set forth below.Â Â
Before non-cash items and the loss attributable to the sale of vessels described above net income was $10.5 million or $0.47 per share for the six months ended June 30, 2009, as compared to $15.7 million, or $0.71 per share for the six months ended June 30, 2008, a decrease of $5.2 million or 33.1% excluding the gain on the sale of vessels in that period.
An average of 41.2 vessels were owned by the Company in the six months ended June 30, 2009, earning an average time-charter equivalent rate of approximately $6,986 per day as compared to 37.9 vessels, earning an average time-charter equivalent rate of $7,781 per day for the same period of 2008.Â Â
CEO Harry Vafias commented:
âThe second quarter of this year has, as I predicted it would be in our first quarter earnings release, proved to be a challenging one. However despite these challenges I am pleased to report that we remain profitable, in a healthy cash position, and, as the company is currently structured without any current expectation of needing to raise any dilutive capital.Â Â
We believe the small LPG market is healthier than the three major shipping segments both from a new buildings order book standpoint and the stability of its freight rates. Apart from the delivery of the Stealth Argentina in November of this year, Stealthgas has no major scheduled capital expenditures until 2011.
I am also pleased to report that in the past few weeks we have seen some recovery in chartererâs confidence and we have managed to secure profitable period business to highly reputable charterers as we outlined in our press release of the 4th August. I am pleased to say that all our charterers continue to fulfil their obligations to us. We currently have 71% of our available charter days fixed for the remainder of 2009 and approximately 40% already under contract for 2010.
We are continuing to strive to control our operating expenses and our net income break even level fell during the first half of this year compared to the first six months of 2008. In my view the second half of 2009 will continue to be challenging, although as we move into the colder part of this year and into early 2010 this may somewhat aid our performance , to the extent we continue to have a significant number of our vessels in the spot market.
Our focus continues to be running our ships as efficiently as possible and, where we can fixing them on period charter to reliable charterers, so as to be able to secure regular and sustainable cash flows to meet our obligations in a timely manner.âÂ
CFO Andrew Simmons commented:
âWe continue to have a soundly structured financial base with net debt to capitalization remaining conservative at 44.4% as at June 30, 2009. Also as evidenced by the sale price achieved in the second quarter of 2009 for the Gas Sophie, the values of our core LPG fleet continue to hold up very well compared to many other sectors of shipping. The debt to market value of our entire fleet in the water as at the 30th June 2009 stood at 52.9% which we believe places Stealthgas in the upper echelon, on a comparative basis, with other U.S. listed shipping companies.
Following the delivery of the Alpine Endurance in July we now only have one further vessel for delivery in November 2009 which is to be financed by a committed facility from one of our core lenders. Thereafter apart from some $11.0 million of yard installment payments due on our LPG new buildings during 2010 and regularly scheduled dry docking expenses, which we expect to meet comfortably from our internally generated cash resources, we have no further significant funding requirements or capital expenditures until early 2011.â
At todayâs meeting, the Companyâs Board of Directors decided to continue the suspension of dividend payments to shareholders.
Fleet Profile and Fleet Deployment:
The table below shows the Companyâs fleet development and deployment as of today:Â
LPG Carrier Fleet
Product Tanker FleetÂ
M.R.: Medium RangeÂ
(1) Earliest date charters could expire.Â Most charters include options to shorten or extend their term.
(2) Birgit Kosan will be redelivered in October 2009 upon payment of a cancellation fee of $192,000.
(3) Gas Prophet has for the three-year duration of bareboat charter been renamed the M.T. Ming Long.
(4)Â Â Â Â Â Gas Evoluzione will be deployed from September 2009 under a time charter to a major international gas trader. The Charterer has the option of extending this charter for a further year upon its expiry in April 2010. The Charterer must declare this option no later than October 15, 2009.
(5) Gas Eternity has for the duration of its bareboat charter been renamed the M.T. Yu Tian 9.Â
(6) Gas Natalie, upon her delivery, continued to be deployed under an existing bareboat charter to a major international LPG operator that expires in September 2011.Â The charterer exercised an option to cancel the existing charter in September 2009 upon the payment of a cancellation fee of $336,000.
(7) Stealth Argentina, a 50,500 deadweight M.R. type product carrier, is expected to be delivered in November 2009.Â Upon her delivery she will be deployed under a three-year bareboat charter.
About STEALTHGAS INC.Â
Headquartered in Athens, Greece, STEALTHGAS INC. is a ship-owning company primarily serving the liquefied petroleum gas (LPG) sector of the international shipping industry.Â STEALTHGAS INC. currently has a fleet of 40 LPG carriers with a total capacity of 176,999 cubic meters (cbm) and three M.R. product tankers.Â In addition, the company has entered into agreements to acquire five new building LPG carriers with expected delivery from February 2011 through May 2012 and one resale new building M.R. product carrier with expected delivery in November 2009.Â Once these acquisitions are completed, STEALTHGAS INC.âS fleet will be composed of 45 LPG carriers with a total capacity of 206,999 cubic meters (cbm) and four M.R. product tankers with a total capacity of 190,500 deadweight tons (dwt).Â STEALTHGAS INC.âS shares are listed on the NASDAQ Global Select Market and trade under the symbol âGASSâ.Â
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, managementâs examination of historical operating trends, data contained in our records and other data available from third parties. Although STEALTHGAS INC. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, STEALTHGAS INC. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, charter counterparty performance, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled dry dockings, changes in STEALTHGAS INCâs operating expenses, including bunker prices, dry-docking and insurance costs, ability to obtain financing and comply with covenants in our financing arrangements, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.Â
Risks and uncertainties are further described in reports filed by STEALTHGAS INC. with the U.S. Securities and Exchange Commission.Â
Visit our website at www.stealthgas.com
Â Company Contact:
Andrew J. Simmons
Chief Financial Officer
The following key indicators highlight the Companyâs operating performance during the second quarters ended June 30, 2008 and June 30, 2009:Â
The following key indicators highlight the Companyâs operating performance during the six months ended June 30, 2008 and June 30, 2009:
1) Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.
2) Total calendar days are the total days the vessels were in our possession for the relevant period including off-hire days associated with major repairs, drydockings or special or intermediate surveys.
3) Total voyage days for fleet reflect the total days the vessels were in our possession for the relevant period net of off-hire days associated with major repairs, drydockings or special or intermediate surveys.
4) Fleet utilization is the percentage of time that our vessels were available for revenue generating voyage days, and is determined by dividing voyage days by fleet calendar days for the relevant period.
5) Total charter days for fleet are the number of voyage days the vessels in our fleet operated on time charters for the relevant period.
6) Total spot market charter days for fleet are the number of voyage days the vessels in our fleet operated on spot market charters for the relevant period.
7) Time charter equivalent, or TCE, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by voyage days for the relevant time period. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. TCE is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods.
8) Vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs, is calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period.
9) Total operating expenses, or TOE, is a measurement of our total expenses associated with operating our vessels. TOE is the sum of vessel operating expenses and general and administrative expenses. Daily TOE is calculated by dividing TOE by fleet calendar days for the relevant time period.Â
Adjusted EBITDA Reconciliation:Â
Adjusted EBITDA represents net earnings before interest, taxes, depreciation, amortization of finance charges and amortization of fair value of acquired time charters.Â Adjusted EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by accounting principles generally accepted in the United States of America, and our calculation of Adjusted EBITDA may not be comparable to that reported by other companies in the shipping or other industries.Â
Adjusted EBITDA is included herein because it is a basis upon which we assess our financial performance and liquidity position and because we believe that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness.Â Â Â
Adjusted EBITDA reconciliation for the second quarters ended June 30, 2008 and June 30, 2009:Â
Adjusted EBITDA reconciliation for the six months ended June 30, 2008 and June 30, 2009:
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1888 935 4575 (US Toll Free Dial In) or 0800 028 1243 (UK Toll Free Dial In).Â
In case of any problems with the above numbers, please dial +1 718 354 1388 (US Toll Dial In), or +44 (0)2078061956 (Standard International Dial In). Please quote "6816401".
A telephonic replay of the conference call will be available until August 27, 2009 by dialing 1866 239 0765 (US Toll Free Dial In), 0800 358 7743 (UK Toll Free Dial In) or +44 (0)207 806 1970 (Standard International Dial In). Access Code: 6816401#
Slides and audio webcast:
There will also be a live and then archived webcast of the conference call, through the STEALTHGAS INC. website (www.stealthgas.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.Â
On January 1, 2009 the Company adopted FASB Staff Position No. EITF 03-6-1, âDetermining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securitiesâ (FSP 03-6-1). In FSP 03-6-1, unvested share-based payment awards that contain rights to receive non forfeitable dividends or dividend equivalents (whether paid or unpaid) are participating securities, and thus, should be included in the two-class method of computing earnings per share (EPS). This standard was applied retroactively to all periods presented and reduced basic EPS by $0.01 for three months ended June 30, 2008.